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Which of the following could explain the change in the budget line from A to B?
a.
a decrease in income and a decrease in the price of X
b.
a decrease in income and an increase in the price of X
c.
an increase in income and a decrease in the price of X
d.
an increase in income and an increase in the price of X
49. The following diagram shows a budget constraint for a particular consumer.
If the price of X is $20, then what is the price of Y?
a.
$15
b.
$25
c.
$35
d.
$70
50. The following diagram shows a budget constraint for a particular consumer.
If the price of X is $12, then what is the price of Y?
a.
$9
b.
$16
c.
$24
d.
$30
51. The following diagram shows a budget constraint for a particular consumer.
If the price of X is $5, what is the consumer’s income?
a.
$10
b.
$30
c.
$150
d.
$300
Scenario 21-1
Suppose the price of hot wings is $10, the price of beer is $1, and the consumer’s income is $50. In addition, suppose the
consumer’s budget constraint illustrates hot wings on the horizontal axis and beer on the vertical axis.
52. Refer to Scenario 21-1. If the price of beer doubles to $2, then the
a.
budget constraint intersects the vertical axis at 25 beers.
b.
slope of the budget constraint rises to -2.
c.
slope of the budget constraint falls to -4.
d.
budget constraint shifts inward in a parallel fashion.
53. Refer to Scenario 21-1. If the consumer's income rises to $60, then the budget line for hot wings and beer would
a.
now intersect the horizontal axis at 6 orders of hot wings and the vertical axis at 60 beers.
b.
not change.
c.
now intersect the horizontal axis at 4 orders of hot wings and the vertical axis at 16 beers.
d.
rotate outward along the beer axis.
54. A budget constraint illustrates the
a.
prices that a consumer chooses to pay for products he consumes.
b.
purchases made by consumers.
c.
consumption bundles that a consumer can afford.
d.
consumption bundles that give a consumer equal satisfaction.
55. A budget constraint shows
a.
the maximum utility that a consumer can achieve for a given level of income.
b.
a series of bundles that cost the consumer the same amount of money.
c.
a series of bundles that give the consumer the same level of utility.
d.
All of the above are correct.
56. Budget constraints exist for consumers because
a.
their utility from consuming goods eventually reaches a maximum level.
b.
even with unlimited incomes they have to pay for each good they consume.
c.
they have to pay for goods, and they have limited incomes.
d.
prices and incomes are inversely related.
57. Karen, Tara, and Chelsea each buy ice cream and paperback novels to enjoy on hot summer days. Ice cream costs $5
per gallon, and paperback novels cost $8 each. Karen has a budget of $80, Tara has a budget of $60, and Chelsea has a
budget of $40 to spend on ice cream and paperback novels. Who can afford to purchase 8 gallons of ice cream and 5
paperback novels?
a.
Karen, Tara, and Chelsea
b.
Karen only
c.
Tara and Chelsea but not Karen
d.
none of the women
58. Karen, Tara, and Chelsea each buy ice cream and paperback novels to enjoy on hot summer days. Ice cream costs $5
per gallon, and paperback novels cost $8 each. Karen has a budget of $80, Tara has a budget of $60, and Chelsea has a
budget of $40 to spend on ice cream and paperback novels. Who can afford to purchase 5 gallons of ice cream and 8
paperback novels?
a.
Karen, Tara, and Chelsea
b.
Karen only
c.
Tara and Chelsea but not Karen
d.
none of the women
59. Abby, Bobbi, and Deborah each buy ice cream and paperback novels to enjoy on hot summer days. Ice cream costs $5
per gallon, and paperback novels cost $8 each. Abby has a budget of $80, Bobbi has a budget of $60, and Deborah has a
budget of $40 to spend on ice cream and paperback novels. Who can afford to purchase 4 gallons of ice cream and 5
paperback novels?
a.
Abby, Bobbi, and Deborah
b.
Abby only
c.
Abby and Bobbi, but not Deborah
d.
None of the women can afford to purchase 4 gallons of ice cream and 5 paperback novels.
60. Abby, Bobbi, and Deborah each buy ice cream and paperback novels to enjoy on hot summer days. Ice cream costs $5
per gallon, and paperback novels cost $8 each. Abby has a budget of $80, Bobbi has a budget of $60, and Deborah has a
budget of $40 to spend on ice cream and paperback novels. Which of the following statements is correct?
a.
Each woman faces the same budget constraint.
b.
The slope of the budget constraint is the same for each woman.
c.
The area underneath the budget constraint is larger for Deborah than for Abby.
d.
All of the above are correct.
61. Jack and Diane each buy pizza and paperback novels. Pizza costs $3 per slice, and paperback novels cost $5 each.
Jack has a budget of $30, and Diane has a budget of $15 to spend on pizza and paperback novels. Which consumer(s) can
afford to purchase 5 slices of pizza and 3 paperback novels?
a.
Jack only
b.
Diane only
c.
both Jack and Diane
d.
neither Jack nor Diane
62. Jack and Diane each buy pizza and paperback novels. Pizza costs $3 per slice, and paperback novels cost $5 each.
Jack has a budget of $30, and Diane has a budget of $15 to spend on pizza and paperback novels. Which consumer(s) can
afford to purchase 3 slices of pizza and 4 paperback novels?
a.
Jack only
b.
Diane only
c.
both Jack and Diane
d.
neither Jack nor Diane
63. Jack and Diane each buy pizza and paperback novels. Pizza costs $3 per slice, and paperback novels cost $5 each.
Jack has a budget of $30, and Diane has a budget of $15 to spend on pizza and paperback novels. Which consumer(s) can
afford to purchase 5 slices of pizza and 5 paperback novels?
a.
Jack only
b.
Diane only
c.
both Jack and Diane
d.
neither Jack nor Diane
64. Suppose a consumer has an income of $800 per month and that she spends her entire income each month on beer and
bratwurst. The price of a pint of beer is $5, and the price of a bratwurst is $4. Which of the following combinations of
beers and bratwursts represents a point that would lie to the interior of the consumer’s budget constraint?
a.
160 beers and 200 bratwursts
b.
40 beers and 50 bratwursts
c.
80 beers and 100 bratwursts
d.
160 beers and 0 bratwursts
65. Suppose a consumer has an income of $800 per month and that she spends her entire income each month on beer and
bratwurst. The price of a pint of beer is $5, and the price of a bratwurst is $4. Which of the following combinations of
beers and bratwursts represents a point that would lie to the exterior of the consumer’s budget constraint?
a.
160 beers and 200 bratwursts
b.
40 beers and 50 bratwursts
c.
80 beers and 100 bratwursts
d.
160 beers and 0 bratwursts
66. Suppose a consumer has an income of $800 per month and that she spends her entire income each month on beer and
bratwurst. The price of a pint of beer is $5, and the price of a bratwurst is $4. Which of the following combinations of
beers and bratwursts represents a point that would lie directly on the consumer’s budget constraint?
a.
160 beers and 200 bratwursts
b.
40 beers and 50 bratwursts
c.
80 beers and 100 bratwursts
d.
80 beers and 0 bratwursts
67. Consider two goods: peanuts and crackers. The slope of the consumer's budget constraint is measured by the
a.
consumer's income divided by the price of crackers.
b.
relative price of peanuts and crackers.
c.
consumer's marginal rate of substitution.
d.
number of peanuts purchased divided by the number of crackers purchased.
68. Suppose a consumer spends his income on CDs and DVDs. If his income decreases, the budget constraint for CDs and
DVDs will
a.
shift outward, parallel to the original budget constraint.
b.
shift inward, parallel to the original budget constraint.
c.
rotate outward along the CD axis because he can afford more CDs.
d.
rotate outward along the DVD axis because he can afford more DVDs.
69. Assume that a college student spends her income on books and pizza. The price of a pizza is $8, and the price of a
book is $15. If she has $120 in income, she could choose to consume
a.
8 pizzas and 4 books.
b.
4 pizzas and 6 books.
c.
5 pizzas and 5 books.
d.
2 pizzas and 7 books.
70. Assume that a college student spends her income on mac-n-cheese and CDs. The price of one box of mac-n-cheese is
$1, and the price of one CD is $12. If she has $200 of income, she could choose to consume
a.
30 boxes of mac-n-cheese and 12 CDs.
b.
40 boxes of mac-n-cheese and 14 CDs.
c.
20 boxes of mac-n-cheese and 16 CDs.
d.
60 boxes of mac-n-cheese and 12 CDs.
71. A consumer who doesn't spend all of her income
a.
would be at a point outside of her budget constraint.
b.
would be at a point inside her budget constraint.
c.
must not be consuming positive quantities of all goods.
d.
must be consuming at a point where her budget constraint touches one of the axes.
72. A decrease in income will cause a consumer's budget constraint to
a.
shift outward, parallel to its initial position.
b.
shift inward, parallel to its initial position.
c.
pivot along the horizontal axis.
d.
pivot along the vertical axis.
73. The slope of the budget constraint is determined by the
a.
relative price of the goods measured on the axes.
b.
relative price of the goods measured on the axes and the consumer’s income.
c.
endowment of productive resources.
d.
preferences of the consumer.
74. The slope of the budget constraint is all of the following except
a.
the relative price of two goods.
b.
the rate at which a consumer can afford to trade one good for another.
c.
the marginal rate of substitution.
d.
constant.
75. Suppose a consumer spends her income on two goods: music CDs and DVDs. The consumer has $200 to allocate to
these two goods, the price of a CD is $10, and the price of a DVD is $20. What is the maximum number of CDs the
consumer can purchase?
a.
10
b.
20
c.
40
d.
50
76. Suppose a consumer spends her income on two goods: music CDs and DVDs. The consumer has $200 to allocate to
these two goods, the price of a CD is $10, and the price of a DVD is $20. What is the maximum number of DVDs the
consumer can purchase?
a.
10
b.
20
c.
40
d.
50
77. Suppose a consumer spends her income on two goods: iTunes music downloads and books. The consumer has $100 to
allocate to these two goods, the price of a downloaded song is $1, and the price of a book is $20. What is the maximum
number of books the consumer can purchase?
a.
100
b.
20
c.
10
d.
5
